Naming Rights and Dragon Villa

Announcements were made by both Birmingham City FC and Birmingham Sports Holdings today that have financial ramifications for the immediate future of the football club. BCFC confirmed that they have sold naming rights to both St Andrew’s and the Wast Hills training complex while BSH have confirmed another share subscription deal that sees Dragon Villa become their second biggest shareholder.

The announcement made by Birmingham City about the naming rights can be viewed here.

It confirmed that TTA have signed a three-year deal to rename St Andrew’s as “St Andrew’s Trillion Trophy Stadium” and Wast Hills as the “Trillion Trophy Training Centre”.

It aligns with rumours I’d heard behind the scenes and talked about on this site on June 5.

As yet no figure has been placed against the value of the deals. However, I would not expect them to be worth a huge amount of money – nor would I expect them to actually result in extra cash being pumped into the club.

As I said on June 5, I think that the sale of the naming rights is to increase the sponsorship revenue column in the Birmingham City accounts, and to reduce the column marked direct investment with the aim to ensure Blues are in line with FFP rules.

However, as Trillion Trophy Asia are a directly connected company the deal must be seen as fair value and I’ve yet to confirm that the EFL have signed off on accepting the deal.

The announcement made by BSH about the share subscription can be viewed here.

This is the more important announcement in my eyes, as it does two things.

Firstly, it proves that BSH had to borrow another £13million to keep the club running last spring, with confirmation that the loan facility was signed off in March 2018.

Secondly, it reduces the shareholding TTA has in the company and increases that of Dragon Villa, a company I have previously linked to the mysterious Mr King.

The new ownership of the club will be as thus once the subscription is complete.

I’ve said before that I believe a transition in ownership is slowly taking place, and while I do not believe it will be complete by October as was previously thought I think it will be done by next summer.

This is regardless of TTA sponsoring the ground. There is an assumption I think that the transfer of ownership means the sale of the club.

I do not believe this is the case – I think it will almost certainly be the transfer of BSH to a different shareholder than TTA – although there is also the possibility that ownership of TTA itself could be moved to another party.

Again, I want to make sure people do not believe that this is money being pumped into the club – it is past debt that is being paid off.

However, what it might do is reopen the credit facility so the club can once again borrow money from Dragon Villa.

That is both a good and a bad thing – on the one hand it is the promise of more investment in the club; on other hand it’s the club borrowing another vast pile of money from someone who is completely faceless which could end up in them owning the club.

There are also potential FFP implications. FFP only allows a debt for equity swap of £8mil per annum and this is for more than that. While it could be argued that BSH and BCFC are not the same entity, (as the learned Number 8 from SHA pointed out) under UEFA rules they are close enough to be ruled as the same thing for FFP purposes. Whether the EFL does anything about that remains to be seen.